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Greece crisis may trigger outflows from India

Rajiv Mehrishi

New Delhi:  The economic crisis in Greece may trigger capital outflows from India and the government is consulting the RBI to deal with the situation, Finance Secretary Rajiv Mehrishi said today.

Stating that the Greece situation has no direct impact on India, he said there may be some indirect effect via Europe on capital inflows and outflows here.

“Greece criss does not have any effect directly on India. (But) interest rate may firm up in Europe. In case of firming up of interest rate in Europe, there can be outflow of capital from India,” Mehrishi told reporters here.

Terming the situation as dynamic and evolving, he said, the crisis may have an indirect impact on India by way of its outcome on the European currency euro.

“To the extent it affects the euro, there might be some indirect impact on India. If yields on euro bonds go up, then it might impact inflows and outflows from India,” he said.

He said nobody can predict how the situation evolves. “Obviously we are in touch with the RBI but they will do what they have to do,” he said.

Asked if any Indian company has an exposure in Greece, he said, “I don’t know.”

“If yields on G-Sec go on in the US, then it might impact inflows and outflows in India. We really don’t know how they (foreign investors) will relocate their portfolio,” he added.

Greece early today imposed capital controls and closed banks until at least July 6 after Prime Minister Alexis Tsipras decided to call a July 5 referendum on a proposed bailout package.

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